▲ This file photo, taken April 1, 2022, shows stacks of containers at a port in South Korea's southeastern city of Busan. (Yonhap)

(LEAD) S&P-S Korea rating

(LEAD) S&P keeps 'AA' rating on S. Korea with stable outlook

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SEOUL, April 26 (Yonhap) -- Global credit appraiser S&P Global said Tuesday it has maintained its credit rating on South Korea at "AA," with a stable outlook.

S&P has kept South Korea's long-term sovereign credit rating at "AA", the third-highest level on the company's table, since August 2016, when it upgraded the rating from "AA-."

"The stable outlook reflects our expectation that the Korean economy will grow more than most other high-income economies over the next three to five years," S&P said in a statement.

"The outlook is also predicated on our belief that geopolitical risks on the Korean Peninsula will not escalate to the point of hurting Korea's economic fundamentals," it added.

S&P maintained its 2022 growth forecast for the South Korean economy at 2.5 percent.

The agency's growth outlook is the same as the latest projection by the International Monetary Fund. The Bank of Korea forecast Asia's fourth-largest economy to grow 3 percent this year.

The South Korean economy is on a recovery track on the back of robust exports and improving private spending. But it faces heightened external uncertainty, as the Ukraine conflict has jacked up fuel prices, putting upward pressure on inflation.

S&P said Asia's fourth-largest economy is expected to be fueled by robust exports and investments, and an improvement in the job market will help boost household income and private spending.

But it voiced concerns that the country's household debt remains "very high" and could "constrain future growth of domestic consumption."

S&P said South Korea's fiscal deficit is expected to narrow in the next two years. It forecast the general government balance to return to a surplus by 2024.

The rating agency said the fiscal deficit for South Korea will likely be at 3 percent of GDP in 2022 and 1.2 percent in 2023.

South Korea's national debt has grown at a fast pace in recent years due to expansionary fiscal spending aimed at tackling the COVID-19 pandemic.

The national debt is forecast to reach 1,075.7 trillion won (US$858 billion) this year, marking the first time the debt would exceed the 1,000 trillion-won mark, according to an estimate by South Korea's finance ministry.

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